South Daytona debate with FPL draws 200

Pamela Rauch maintained that customer rates and reliability would suffer if the city took over. Brandon Young countered that city profits would go to upgrade an aging system

RAY WEISSSTAFF WRITER

SOUTH DAYTONA — There were no network TV cameras or political pundits analyzing every word or facial expression. But for the residents of this 4-square-mile city, Tuesday night's debate between Brandon Young and Pamela Rauch had more immediate significance than President Barack Obama and Mitt Romney's town hall. Young, a city councilman, and Rauch, a Florida Power & Light vice president, debated the pros and cons of the proposed $12.1 million sale of the electrical distribution system, just three weeks before South Daytona votes on the issue. Rauch maintained that customer rates and reliability would suffer if the city took over. Young countered that city profits would go to upgrade an aging system, and that contracted utility crews would respond more quickly to emergencies. "The question before you is whether the money that FPL makes in profit should go to their out-of-town investors or stay in our community to help us pay for our services and keep our taxes low," Young told about 200 people attending the forum. "(Do) you want your rates set by appointed bureaucrats in Tallahassee, or local officials elected by South Daytona voters ... I believe the industry experts who say this purchase is a great deal for the city, and that it will be profitable." Rauch said the city's position was based on inaccurate assumptions, adding that ownership by South Daytona would put customers at more risk, both financially and in terms of service. "We work hard to provide one of the top records for reliability in the nation," she said. "We invest hundreds of millions of dollars in our system every year." Rauch, FPL's vice president of Development and External Affairs, said FPL now pays the city about $1.4 million annually "risk free" in franchise fees and other taxes paid, "money that will go away and have to be made up" if South Daytona bought the system. The one-hour forum was sponsored and moderated by the League of Women Voters of Volusia County at the White Chapel Church of God at Warner Christen Academy. For many years, the fight between South Daytona and FPL has divided the community. City leaders refused to sign a 30-year franchise renewal agreement in 2008 that would have eliminated, without compensation, what was considered the best buyout option in the state. After years of debate over the price of the system, the city went to court in 2011 before Judge William Parsons, who set a sale price, which currently stands at $12.1 million. The City Council in July 2011 voted 4-1 to buy FPL's system. While negotiations with Parsons have proceeded on finalizing the sale, FPL has contributed about $250,000 to a political action committee — Take Back Our Power, which was successful in getting the issue before voters. Young told the audience FPL has refused to "open its books" regarding its profits from the city. "But I can tell you what they told a judge in sworn testimony before the Federal Energy Regulatory Commission. They said they made $4 million a year in gross profit," he said. "Their political action committee, Take Back Our Power, said it made $500,000. Whether it's $500,000 or $4 million, or something in between, it's profits that aren't being reinvested back into this community." He said the city expects to make $465,000 in the first year of operation, and $1.1 million by the fifth year. Rauch questioned the projections from the city's consultants. "There's a lot missing in regards to what the risk will be if the city is wrong. What if the city is wrong?" she said. Rauch said that if voters approve the sale, hurdles would remain. "Many agreements would have to be negotiated, such as purchase and sale, transmission, wholesale power," she said. "There will be a lot of steps post-election, one way or the other." If approved by voters, Young said the city would proceed "hopefully with no more legal challenges" from FPL. If opposed, he said the City Council would be "bound by the citizen's wishes." "We'd explore where does that leave us. We still have the acquisition and assets," he said. "We'd still have some of the outstanding costs that are associated with it ... And we'd explore what our contractual agreements are and try to move forward from that standpoint." Earlier in the day, FPL's president, Eric Silagy, met with the News-Journal's editorial board. As far as the franchise agreement — the root of the disagreement between the parties — he said the current buyout option cannot be renewed because of a change in state law in the 1980s. For the most part, that revision standardized buyout options, making it cost prohibitive for a city to buy its electrical distribution system. "South Daytona wanted language that no one else in the state had," Silagy said. "... What we're doing is bringing it (the wording) into conformity with everybody else."